The Bob Murphy vs. Warren Mosler Debate: Mosler Explains Permanent Zirp

     I'm really enjoying the debate. I think  both have spoken well Murphy started from a standpoint of explaining that Austrian Business Cycle Theory (ABCT) doesn't believe in the use of economic aggregates but thinks economics must be explained at the individual level.  What strikes me is this is no different from the dominant Neoclassical school.

    http://www.youtube.com/watch?v=cUTLCDBONokl

   Basically the dividing line is between Keynesian economics and pre-Keynesian economics, Prior to Keynes there was no such thing as microeconomics.

   Mosler does a good job of showing that the ABCT w.orry about interest rates being manipulated might have had some validity in the gold standard era but not in today's fiat money system/ He argues that a permanent zero interest rate is not government manipulation.

   He argues that to the contrary having a higher interest rate is actually the government manipulation-for the Fed to raise the interest rate is a subsidy. He argues that ZIRP would be permanent if two things were to happen:

   1. The Fed stopped paying IRR

   2. The Treasury stopped issuing securities-he argues that at most the Treasury should issue only very short term securities.

   So while permanent ZIRP might seem extreme, it in this sense would be natural, indeed, market rate. Note that in a sense he's not so far away from Sumner who criticizes IRR and has said he imagines that in the future ZIRP will be long term in fact.

   Good debate, and I think that Murphy is a good speaker and has a personal touch that is much less strident of the image of Internet ABCT-which is basically Major Freedom. On balance though I'm very impressed by Mosler who clearly wins the debate in the battle of ideas. 

Some Thoughts on MMT vs. Market Monetarism

     I wrote a piece on Sumner's posts on MMT that got posted on Mike Norman's Economics-which is cool.

     http://diaryofarepublicanhater.blogspot.com/2013/11/sumner-on-achilles-heel-of-mmt.html

    http://mikenormaneconomics.blogspot.com/2013/11/mike-sax-sumner-on-achilles-heel-of-mmt.html?utm_source=twitterfeed&utm_medium=twitter&m=1

    However, Peter P. left this comment:

    "Hmm, who cares what Sumner thinks about MMT? He is hopelessly lost."

       See, for me that's part of the problem. Sumner doesn't write about MMT or try to engage either as in his mind he thinks 'who cares what MMTers think the're totally lost.'

      We have two schools of thought talking past each other, each happy just to preach to the choir, neither interested in trying to engage. I guess the reason I do think you have to care a little what Sumner says-even if your opinion of him is as low as say Greg's (LOL)-is because a lot of people do care what he thinks and not just Right wing ideologues either. Many more centrist or even liberal types have been seduced by his intuitive ideas-intuition of course is not proof of truth as we've known since Kant. 

    There are also people like myself who have suffered from unemployment who have latched onto Sumner's assurances that just do his NGDPLT and all will be well-like Becky Hargrove who is a very nice person but who I think has been a little beguiled, frankly. 

     http://diaryofarepublicanhater.blogspot.com/2013/02/this-is-your-brain-on-scott-sumner.html

     Hickey's piece confirmed that I'm right in thinking that they favor a permanent zero interest rate set by the Fed and basically absorbing the Fed back into the Treasury. I'm not sure what this would really mean and probably wouldn't go that far myself.

      In a perfect world for me, we shouldn't necessarily 'end the Fed' but we should certainly trim it's 'independence.' The number of regional Feds should be cut down, the number of President's should be and they should all be nominated through Congress. The Fed should not have a presumption of somehow being free of politics-a number of countries, like Britain and Canada have an arraignment where the Treasury tells the Fed what monetary policy is desirable-which is how it was in the U.S. during the Eccles era.

      At the end of the day,even is Sumner doesn't get it a lot of people think that he does and that at least should be a point of concern. I'd love to have a Sumner-Mosler debate but doubt that Sumner would do it-he probably isn't going to be seen in public with anyone outside the Neoclassical bubble.

      Thanks to Y for letting me know that Bob Murphy already debated Mosler-I've just started watching it and am in econ nerd Heaven! 

Tom Hickey Explains MMT to Sumner

      Sumner vs. Tom Hickey on MMT http://diaryofarepublicanhater.blogspot.com/2013/11/tom-hickey-explains-mmt-to-sumner.html

      I see my earlier piece on Sumner's take on MMT made it to Mike Norma'n's blog-which I got to admit I find kind of exciting. Hickey explains what MMT actually does believe in response to Sumner's piece. 

    http://diaryofarepublicanhater.blogspot.com/2013/11/sumner-on-achilles-heel-of-mmt.html

    Here is Tom:

    "What Scott Sumner doesn't seem to want to understand is that MMT favors fiscal policy based on functional finance over monetary policy involving interest rate setting. His scenario depends on interest rates only and doesn't take into account what MMT actually is about, namely, the replacement of monetary policy run by the central bank ("monetarism") with fiscal policy under the direction of the political authority ("fiscalism"). Instead, Sumner only argues within his own paradigm, the assumptions of which MMT rejects."

    http://mikenormaneconomics.blogspot.com/2013/11/mike-sax-sumner-on-achilles-heel-of-mmt.html?utm_source=twitterfeed&utm_medium=twitter&m=1

    However, I can imagine what Sumner might say to that-he's constantly saying that interest rates aren't a good guide to the stance of monetary policy, that what matters is NGDP or maybe nominal wages. I'm not saying Sumner is right about this just that this is what he might say. For example here:

   http://www.themoneyillusion.com/?p=23083

   Tom makes the political argument for fiscal policy over monetary which I think has a good deal of credence as I recently argued. 

    http://diaryofarepublicanhater.blogspot.com/2013/10/central-bank-independence-and-scott.html

    No question he's right that this recession has shown that the size of the monetary base doesn't matter. The best Sumner can do is argue that it matters when the economy is more healthy. 

    Just as I supposed in my MMT-Sumner piece, Hickey confirms that MMT favors a permanently zero interest rate as fostering investment. What makes post Keynesian economics generally different is the lack in the belief in a 'long run' but rather that the LR is just a collection of short runs. 

     If the CB sets the interest rate at zero, then banks will have a lower cost of lending and can lend less expensively, which they will tend to do in a competitive market. This will favor investment, e.g., permanently low long term rates for residential RE. 

    "MMT regards monetary policy as ineffective in controlling inflation, which result either from supply shortages, e.g., the Arab oil embargo, or demand outstripping the capacity of an economy to meet it. If the government deficit spends to the degree this creates or contributes to excess demand at full employment, then inflation will result. The obvious answer is to cut spending and increase taxes to reduce demand."

    "MMT is fiscalist, holding that demand is the key fundamental and the chief objectives are full employment along with optimal output and relative price stability. "

    "MMT is anti-monetarist, holding that the size of the monetary base is essentially irrelevant, as QE has shown, the quantity theory has been discredited and interest rates are at best a shotgun, whereas fiscal policy can be tightly targeted. In addition, interest rate setting involves picking winners and losers."

     "Rather than using interest rates to conduct policy, MMT would use fiscal policy in accordance with the sectoral balance approach and functional finance, along with the MMT JG as a price anchor. "

     Again, just to play devil's advocate, it could be pointed out that deficits don't necessarily lead to inflation as the Reagan deficits proved. The supply siders and liberal opponents were both half right-the deficits weren't inflationary but contra the SSers, there were huge deficits. 

     I recently wrote about Larry Lindsey's SS manifesto back in 1990-when their smugness was at its zenith with three straight Republican landslides. 

     http://diaryofarepublicanhater.blogspot.com/2013/10/larry-lindsey-on-keynesianism-vs-supply.html

      Again, he is right that the deficits didn't prove inflationary but he is really being sophistical when he tries to claim that the Reagan tax cuts didn't have much to do with the deficit-he estimates that it was 'only 30%'-which is a pretty big chunk I think. 

      As to Tom's idea of a Mosler-Sumner debate it's a nice idea but no way will Sumner do it-he's been refusing to engage anyone who questions his core theories for some time now. Incidentally does anyone know if Mosler and Bob Murphy plan to ever have their debate? Or did they already have it?

          

    

   

In Virginia GOP Sun Also Setting

     The election for Governor is not until Tuesday. However, all you need to know about how the race between the state Attorney General Ken Cuccinelli and Terry McAucliffe is going is that the main topic of conversation between GOP operatives is how this has gone so badly. h

      "National Republicans agree on this much about the 2013 campaign in Virginia: It wasn’t supposed to go like this.Well before the last votes are cast in the state’s off-year governor’s race, GOP leaders are already engaged in a spirited debate over why, exactly, a fight against a Democrat as flawed as Terry McAuliffe has turned into such a painful slog of a campaign. Even Republicans who haven’t yet counted out their nominee, state Attorney General Ken Cuccinelli, view the governor’s race as a profile in frustration for the GOP – an election that should have leaned toward the Republicans, but where Democrats have held a persistent lead in polling, money and tactical prowess."

     Read more: http://www.politico.com/story/2013/11/virginia-gubernatorial-election-2013-republican-ken-cuccinelli-99249.html#ixzz2jVcfJt00

     Today I wrote a few posts about the ideology of 'states rights' and how this continues to function for an apologia for what it's always been-reactionary state laws that don't pass federal constituional muster. 

      http://diaryofarepublicanhater.blogspot.com/2013/11/on-anti-gay-discrimination-chuck-hagel.html

     http://diaryofarepublicanhater.blogspot.com/2013/11/roger-shuler-in-jail-without-bail-what.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29

     While the national party is a mess and seems determined not to take any of the steps that might forestall the bleeding, the state races have proven to be the party's Great White Hope-pun intended-as where they can still find a 'social laboratory' for reactionary ideas and policies. However, Virginia, which has been a reliable red state seems like it may be poised to have no state wide Republicans just like California. 

     "A Cuccinelli defeat, in other words, would have a thousand fathers. But this much is already clear: the GOP’s accumulated problems in Virginia have brought the party to the edge of a historic defeat in a nationally pivotal swing state, potentially producing a Republican shutout of all five statewide offices (governor, attorney general, lieutenant governor and two U.S. senators) for the first time since the Nixon administration.

     Meanwhile, we have the Heritage Foundation assuring Republicans that they really don't need the Hispanic vote anyway so why vote for immigration reform? Just increase the White vote to the level it was at in 2008-the fact that they actually lost in 2008 in a landslide being an unimportant detail. 

      You wonder what this might bode for 2014. Yes, it may just be an individual case that doesn't reflect the larger electorate in 2014-though even so this would certainly hurt them in 2016 in trying to get Virginia back in the GOP win column-on the other hand, it may not be. 

      If it isn't then they're really in trouble as what we're seeing in Virginia is not good-actually it's great for us and the people of Virginia but terrible for the GOP. We saw the rich donors get behind McAucliffe who certainly has some baggage. While most analysis of the unhappiness of wealthy donors with the Republicans in the aftermath of Govt Shutdown 2.0 has argued that nevertheless the donors won't turn on the Republicans totally or at least certainly wont go with the Democrats. In Virginia, however, this is exactly what has happened. 

    

      "The clearest battle lines will emerge after Tuesday; but the Washington community has groused for months about Cuccinelli’s history of incendiary, ultra-ideological stances, while rank-and-file activists have watched with horror as well-tailored GOP donors have defected to McAuliffe. Everyone in the party – establishment and tea party alike – has fumed over the ongoing ethics controversies that have rocked outgoing Gov. Bob McDonnell’s administration and undercut Cuccinelli’s anticipated advantage over McAuliffe on personal integrity."

       Incidentally, McAuliffe has more than just 'moral integrity, he's an obsessed Puritan who wants to poke his nose into your bedroom and if he doesn't like what he sees, send you to jail. 

  http://www.slate.com/blogs/xx_factor/2013/10/08/supreme_court_rejects_ken_cuccinelli_s_sodomy_appeal.html

       

Sumner on the Achilles Heel of MMT

      UPDATE: I see that Tom Hickey over at Mike Norman's economic blog had a post about this post so I've now written a follow-up post.

     As I observed in an earlier post, Sumner no longer even tries to engage any heterodox schools of economic thought but he used to. He agreed with me when I suggested that hes become much more hypersensitive over time:

      "Mike Sax, Yes, I’ve gotten more frustrated and testy over time. Partly due to seeing the same comments over and over again, and partly because I’m increasingly busy–too busy. But I agree that is a fault on my part."

     http://diaryofarepublicanhater.blogspot.com/2013/11/on-anti-gay-discrimination-chuck-hagel.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29

      I was just looking at an oldie but goodie-some posts where he did engage MMT. Here he thought he found their flaw:

     "Suppose we pick a fairly “normal” year, when NGDP growth and nominal interest rates and unemployment are all around 5%.  It might be 2005, 1995, 1985, whatever.  The exact numbers aren’t important.  Now the Fed does an OMP and doubles the monetary base by purchasing T-securities.  They announce it’s permanent.  What happens?"

      "One MMT answer is that the Fed can’t do this.  It would cause interest rates to change, and they peg interest rates.  But the more thoughtful MMTers seem to be willing to let me do this thought experiment, as long as I acknowledge that interest rates would change and that it’s not consistent with actual central bank practices.  I’m fine with that. "

      "So let’s say they double the base and let rates go where ever they want.  I claim this action doubles NGDP and nearly doubles the price level.  MMTers seem to disagree, as I haven’t changed the amount of net financial assets (NFA) at all."

  

      "But here’s the Achilles heel of MMT.  Neither banks nor the public particularly wants to hold twice as much base money when interest rates are 5%, as that’s a high opportunity cost.  So they claim this action would drive nominal rates to zero, at which level people and/or banks would be willing to hold the extra base money.  Fair enough.  But then what?  You’ve got an economy far outside its Wicksellian equilibrium."

    "The MMTers like to talk about cases where large base injections did coincide with near zero rates—The US in 1932 or 2009, Japan in the late 1990s and early 2000s.  But those were all economies that were severely depressed and/or suffering deflation.  I find it hard to believe that you could cut rates from 5% to 0% in a healthy economy without triggering an explosion of AD, especially if the economy was already experiencing normal levels of NGDP, normal growth in NGDP, and normal unemployment levels.  The closest example might be the US after WWII, but remember that people (wrongly) expected deflation after the war, and by 1951 the Fed gave up on that policy due to rapidly rising inflation."

      http://www.themoneyillusion.com/?p=10238

       However, why should we only debate 'normal'-ie, years we aren't in a really bad recession when the real debate is what we do in a really bad recession? Are MMTers denying that you would stimulate the economy by dropping interest rates from 5% to 0%. I don't know who is exactly. If anything they probably agree with that as many of them think we should always leave rates at 0%.

        It's obvious that in a recession of the magnitude of 2008 a huge expansion of the monetary base doesn't do much.  I recently wrote about a great post by David Glasner where he pointed out that Lucas' attempt to use Ricardian Equivalence to show fiscal stimulus can't work-the trouble is that even on Lucas' own terms ,RE only works if you assume a normal functioning economy. The same thing Sumner assumes here. 

      http://diaryofarepublicanhater.blogspot.com/2013/10/scott-sumner-vs-david-glasner-on-fiscal.html

      I see the smart econ blogger JKH who doesn't nominally consdier himself an MMTer agreed with me in the comments section of the above Sumner post both that MMT does think in a healthy economy MMTers would agree that a a big increase in the monetary base would drive interest rates from 5% to 0% and also confirms my understanding that the MMTers favor a permanent 0% interest rate set by the Fed. 

       "If the funds rate is at 5 percent and the Fed floods the system with reserves to the degree you suggest, and doesn’t pay interest on those reserves, there is no question that the funds rate will head for zero."

       "MMT might then go in a different direction. They might say that they would then prefer a policy that set the funds permanently at zero, which is an area where I think you and Nick have big problems with them, among others. They would say they can set the funds rate at zero permanently, if they so choose, and then regulate AD via tax policy. If they could do that successfully, then by definition and implication, they could affect the curve as well because they would obviously affect expectations for fed policy."
      

      

Roger Shuler in Jail Without Bail: What Year is it in Birmingham Alabama?

     The headlines sure make it seem like it's 1965:

     "There seems to be at least one in every state. A local with a blog and an aggressive interest in state politics and muck. Publishing what the local papers wouldn't touch. Walking the line between rumor and news. Conversant with the key issues, and familiar with the key names. Unafraid or indifferent to pissing people off."

      "In Alabama, Roger Shuler is one of those guys. And as a result of an ongoing fight about what he's written on his blog, Shuler is currently in jail."

      "Shuler was arrested last week in his Birmingham home and is being held without bail in a Shelby County, Ala. jail for contempt of court and resisting arrest."

      "The charges stem from a case brought by Rob Riley, a Birmingham attorney and the son of former Gov. Bob Riley (R). Over the past 11 months, Shuler has written blog posts asserting that Riley had an affair with an Alabama lobbyist. Riley has denied the story, and tried to take Shuler to court. Shuler wouldn't cooperate. And he continued to write about the alleged affair, violating a court order in the process."

       "For years, Shuler has maintained a blog called Legal Schnauzer, to which his wife, Carol Shuler, also contributes. (The blog's tagline is: "The memory of a beloved pet inspires one couple's fight against injustice.") A 1978 graduate of the University of Missouri, Shuler worked as a journalist and then for years as an editor for the University of Alabama at Birmingham's publications office. He was fired from that job in 2008, and claimed his firing came as a result of his writing about high-ranking political figures in Alabama. While Shuler didn't have proof, his firing got attention outside Alabama."

      "Shuler's problem arose not because he blogged nor because he did so from his workplace, because it's clear he didn't," Scott Horton, a journalist for Harper's Magazine and a lecturer at Columbia University Law School, told Raw Story in 2008. "His problem came from the fact that he wrote critical, well received insights targeting a number of very powerful figures in Alabama, starting with U.S. Attorney Alice Martin and prominent Republicans with which she is aligned, and including a number of major figures in the Alabama media.

     http://talkingpointsmemo.com/muckraker/alabama-politics-blogger-jailed-for-writings-on-ex-governor-s-son

     It's true that Shuler violated a court order but it sounds like the court order a rather compromised one:

     "Riley claims our reports are false and defamatory, but he has taken a number of steps to shield the case from public view," Shuler wrote. "The Riley lawsuit explains the swarm of Shelby County sheriff deputies that repeatedly trampled our property and pounded on our door throughout last week. It also explains the fraudulent traffic stop that Lt. Mike DeHart conducted on Sunday afternoon in order to 'serve' me with court papers."

     "Things escalated from there. On Oct. 4, Riley asked a Shelby County court to hold the Shulers in contempt of court for violating a restraining order -- the court papers served by Lt. DeHart -- that directed them to "cease and desist immediately from publishing ... any defamatory statement about Petitioners, including, but not limited to, any statement that Petitioners had an extramarital affair." (Shuler appears to have represented himself in the case.) By Oct. 22, Shuler anticipated that he might wind up in jail, in a post accusing Riley of having a hand in the court orders issued in the case."
"
    Jay Murrill, an attorney at Riley's law firm who is representing his boss in the case, appears to have written an order to grant a preliminary injunction and seal the public file, plus an order to hold us in contempt," Shuler wrote. "If granted, the contempt order could subject us to incarceration."

    For me when I hear conservatives sing the praises of states rights Birmingham Alabama is the kind of place that immediatley comes to my mind

    http://diaryofarepublicanhater.blogspot.com/2013/11/on-anti-gay-discrimination-chuck-hagel.html

    It's probably what comes to conservatives' minds as well-this is their definition of justice where powerful, connected Republicans put anyone they want to in jail with impunity. Stories like this hardly make you want to greatly increase the power of the states. 

    In checking out Legal Schnauzer just a cursory look shows it's well worth the price of admission. 

    "Two prominent Alabama Republicans--Rob Riley and Jessica Medeiros Garrison--have filed lawsuits against me in recent weeks, claiming my reporting on their extramarital affairs is false and defamatory. I know--and I suspect Riley, Garrison, and their respective lawyers know--that the lawsuits are baseless and designed merely for purposes of harassment and intimidation."

     "Aside from the lawsuits' merits (or lack thereof), we see an alarming trend involving the plaintiffs. They and their associates can't even get the complaints served without engaging in fraudulent conduct. And I don't use the "f word" casually here. The cases hardly are off the ground, and court documents show that individuals acting on the plaintiffs' behalf have engaged in fraud on the court."

      http://legalschnauzer.blogspot.com/2013/10/riley-and-garrison-lawsuits-against.html

     Shuler argues that the service of processing papers weren't done properly so that by definition the case should be thrown out. Alabama justice-if conservatives had their way coming to a county near you. 

      P.S. I digress but Shuler also has a great picture of Garrison on his site-she is a very attractive woman. Just putting it out there. 

     

    

     

    

On anti Gay Discrimination, Chuck Hagel Takes on State's Rights

     I saw an interesting discussion in the comments of my recent post on Sumner and what I see as his bid for CB independence. Edward-a normal, and I find quite intelligent-commentator at Sumner's left a few comments. Which is welcome-I really don't want to take potshots, I want to engage, however for whatever reason, Sumner doesn't like to engage me.

    My regular commentator Greg had some things to say as well in response to Edward. First Edward:

    "Greg,"

    "What do monetary experts have to do with economics Scott? I thought money was a neutral veil? We dont even need money to understand economics according to all of Nick Rowes quaint little stories. Money is just another good. If its just another good why cant homo economicus figure out how to use it since we are so rational and create totally efficient markets?"

     "??????? MONEY IS A NEUTRAL VEIL IN THE LONG RUN."

     "The people out there who simply read Keynes as "govt big spending advocate always" just love Scott."

     "This is slightly true. I like Scott because he favors stimulus in a depressed economy, but on other issues he's a pragmatic libertarian, not part of the nutty Ted Cruz, Rand Paul Ron Paul Crowd."

     http://diaryofarepublicanhater.blogspot.com/2013/10/central-bank-independence-and-scott.html

     Greg retorts:

      "MONEY IS A NEUTRAL VEIL IN THE LONG RUN."

      "NO ITS NOT"

       "The long run is just a succession of short runs. There is nothing neutral about it. That gets repeated as if its a self evident or firmly proven point, which its not."

       "He may favor stimulus, but he doesn't seem to figure out how to get it from monetary policy, unless the Fed goes fiscal and starts handing out 1000$ bills for bags of dirt."

       "And I'm not so sure about the pragmatic part. Pragmatists don't claim to have figured out once and for all beyond a shadow of a doubt that fiscal policy has no positive affect. He has that belief but he hasn't proven anything. And pragmatists don't scoff at criticisms of policy suggestions (like NGDP futures) by people who do those things for a living! Scotts an ivory tower academic with no real world experience. Everything he's learned was from someone else. His goals are not anything but political."

     Again, I've tried to believe the best in Scott, but he's made it very difficult for me to do so. One problem is personal of course-he has no interest in engaging me. I'm not the only one either. I notice that he used to try to engage the MMTers but has given up. Is this because he's decided that it's hopeless getting through to them or because he knows he won't get the better of the argument. 

    http://diaryofarepublicanhater.blogspot.com/2012/07/scott-sumner-stephen-williamson-mmt-and.html

    http://diaryofarepublicanhater.blogspot.com/2012/07/scott-sumner-scott-fullwiler-grudge.html

   http://www.themoneyillusion.com/?p=10238

    http://www.themoneyillusion.com/?p=10116

     In the above link Sumner argued that you can't explain the price level without QTM and since-he asserted-they rejected the QTM their monetary theory must be wrong. Of course, you would have to also establish:

     1. They don't believe in the QTM

     2.  The QTM is right. 

     Of course, Sumner just presumes the QTM is right and calls it a day. In any case, at least back then he would try to engage. He has since quit doing that and has gotten a lot more hypersensitive to criticism since I've notice. For the record, when I said that to him he agreed. 

     http://diaryofarepublicanhater.blogspot.com/2013/05/scott-sumner-has-now-written-2001-posts.html

     "Mike Sax, Yes, I’ve gotten more frustrated and testy over time. Partly due to seeing the same comments over and over again, and partly because I’m increasingly busy–too busy. But I agree that is a fault on my part."

    http://www.themoneyillusion.com/?p=21140#comment-247360

     The reason for these same comments is because the commentators in question obviously don't feel it answered them satisfactorily. 

     So I tend to think that Greg is right-that while Sumner claims that what we need are for enlightened monetary technocrats to run monetary policy while standing aloof from any political influence or agenda. in reality his whole agenda is totally political. 

    I can't see his belief in the zero fiscal multiplier as anything but political which is why I sometimes refer to him as a 'Republican.' He doesn't like this as he likes to present himself as being above politics but if you follow his prescriptions you find that the Republicans are basically right if you believe him. This is a point Morgan Warstler makes again and again. Notice too while many like Edward say that Sumner is 180 degrees from a Ted Cruz, Morgan loves Ted Cruz and he loves Sumner. 

   So some ideas-and I think monetary offset is one-are not nearly as 'neutral' or 'pragmatic' as they appear. 

    Another such idea is the doctrine of states rights. First of all, SR just has a terrible history-it was used to justify slavery in the 19th century and segregation in the 20th. It's usually function has been to aid and abet political reactionaries. Today, because of their failures at the national level-which are only going to get worse as they've learned nothing-the Republicans have been doubling down at the state level over the last 4 years. 
  
    We've seen anti labor laws, anti voting laws, anti female laws-rolling back abortion and birth control access. I call them anti female because their impact is not just about abortion. When Red state after red state shuts down 3/4 of the abortion clinics in the state note that these clinics don't only do abortions but offer a myriad of other healthcare and gynecological services. 

    We've seen many states really flouting federal law in perusing these reactionary policies. In the latest, we see a number of states ignoring that DOMA has been struck down by the SJC and that DADT has been outlawed. Chuck Hagel very eloquently took on states rights circa 2013 the other day in a speech at the anti Defamation League. 

   "Defence Secretary Chuck Hagel has criticised nine US states for refusing to issue identity cards to same-sex spouses and said he expected the adjutants general for the state militias to comply with lawful directions and Pentagon policy."

    "Hagel said the Defense Department moved to begin issuing identity cards to the spouses in same-sex couples following a Supreme Court ruling this year that cleared the way for them to receive the same work-related benefits given to heterosexual couples."

    "Several states are refusing to issue these IDs to same-sex spouses at National Guard facilities," Hagel told the Anti-Defamation League. "Not only does this violate the states' obligations under federal law, their actions have created hardship and inequality."

     "Refusal to issue the cards at state militia facilities means couples may have to travel long distances to federal bases to obtain the cards there, Hagel told the centennial dinner of the Anti-Defamation League."

     "This is wrong. It causes division among the ranks, and it furthers prejudice, which DoD (Defense Department) has fought to extinguish," Hagel told the group in remarks honouring his predecessor, Leon Panetta.

     http://www.stuff.co.nz/world/americas/9352119/Pentagon-chief-hits-out-at-discrimination

      Mr. Hagel made two things very clear. These states are in noncompliance with federal law. He will make sure they do comply. This is the 2013 version of when Dwight Eisenhower sent troops to Little Rock in 1957. That thankfully won't be necessary this time but compliance will be enforced. 

     Hagel told the ADL he had directed General Frank Grass, the National Guard chief, to meet with adjutants general from the nine states to deal with the issue.

     "The adjutants general will be expected to comply with both lawful direction and DoD policy, in line with the practices of 45 other states and jurisdictions," Hagel said.

     What do monetary offset and states rights have in common? For one thing, they are both conservative ideas and while belief in one may not seem to necessitate belief in the other many, most conservatives do. Indeed, I don't think you'll find many who believe in states rights who do believe that fiscal policy is a good way to stimulate growth during a recession. 

      More to the point, both ideas claim to be pragmatic, intellectual arguments, yet both clearly have a an unacknowledged political agenda. 

      P.S. I agree with Edward that the negative income tax is worth looking at. I notice though that no Republicans discuss today like they did in the 70s-so how's it going to get passed? I just recently ordered a book about the very interesting experience of New Jersey and the negative income tax. 

      http://www.amazon.com/gp/product/081576975X/ref=oh_details_o01_s00_i00?ie=UTF8&psc=1